GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

Where such objective evidence of impairment is observed then the impairment amount corresponding to the difference between the acquisition cost and the fair value for that fiscal year, less any loss in value previously recognised through income, is automatically booked toincome. These criteria may undergo changes over time, by applying good judgement,in order to take account of changes in the environment in which they were postulated.This should allow for the handlingof abnormal circumstances (such as a sharp and abnormal drop in net assetvalues on the balance sheet date). In addition, in all other cases in which these thresholds are not reached, the Group identifies securities in its portfolio constantly presenting a significant unrealised capital loss over the last six months based on the volatility of the financial markets. For the thus separated securities the Group then carries out a review, based on its judgement,security by security, and decides whether to post an impairmentthrough income or not. In the event that the financial managementof a line of securities is done in a comprehensivemanner at the Group level, even when these securities are held by several entities, the determination of whether objective evidence of impairment exists can be done based on theGroup’s costprice. The impairment recorded on a shareholders’equity instrument will only be reversedto income whenthe asset in questionis sold. INVESTMENTSVALUEDATAMORTISEDCOST For investments valued at amortised cost, the amount of the reserve is equal to the difference between the net book value of the assets and the discounted value of the future cash flows expected, determinedon the basis of the original effective interest rate of the financial instrument,and correctedfor any reserves.The amount of the loss is included in the net income or loss for the fiscal year. The reserve may bewritten back through income. Derecognition (g) Financial assets are derecognised when the contractual risks expire or the Group transfersthe financial asset. Gains or losses on the sale of financial investmentsare determined using the FIFO method, with the exceptionof the securities carried by mutual funds. The method used for mutual funds is the weighted average costmethod. The gains and losses from divestment are recorded in the income statement on the date of realisation and represent the difference between the saleprice andthe net book value ofthe asset. Investment property 3.2.2 The Group has chosen to recognise investmentproperty using the cost method. It is valuedusing the component approach.

transaction costs directly attributable to the transaction, except in the specific case of investment property representing unit-linked commitmentsthat may be posted, by discretion, to income at fair value. When a real estate asset includes a portion held to produce rental income and another part used for production or administrative purposes, the asset is treated as investment property only if the latter is immaterial. At the time of the initial recognition, property is subdivided by components andrecorded separately. The impairmentperiods applied by the Group for each component depend on the nature of the property under considerationand are as follows: building shell (impairment period between 30 and 120 years); ❯ wind- and water-tight facilities (impairment period between 30 ❯ and 35 years); heavy equipment(impairmentperiod between20 and 25 years); ❯ secondary equipment, fixtures and fittings (impairment period ❯ between 10 and15 years); maintenance(impairmentperiod: 5 years). ❯ Valuation (b) The cost of the property is the amount at which the property has been recorded at the time of initial recognition, minus cumulative amortisation and corrected for any reserves for impairment. The acquisition cost of the property is dependent either on an outright acquisition, or on the acquisition of a company that owns the property. In the latter case, the cost of the property is equal to its fair value on the date of acquisitionof the ownercompany. Each componentis identified byits duration anddepreciation rate. The residual value of the shell component cannot be valued with sufficient reliability, particularly given the uncertainties about the holding horizon; thus this component is amortised on the basis of the acquisitioncost. Rent payments are recorded using the straight-line method over the termof the lease agreement. The realisable value of investment properties is determined on the basis of the five-year independent appraisal conducted by an expert approved by domestic regulators (Autorité de Contrôle Prudentiel et de Résolution, in France). During each five-year period, the real estate is subject to an annual appraisal certified by the expert. Subsequent expenditure (c) Subsequent expendituremust be added to the book value of the property: if it is probable that these expenses will allow the asset to ❯ generate economicbenefits; and these expensescan be reliably valued. ❯

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Initial recognition (a)

Lands and properties appear in the balance sheet at their acquisition cost. The value of the property includes significant

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES